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BUZZ-COMMENT-Month-end flow expectations for FX and the U.S. dollar

Credit: REUTERS/DADO RUVIC

Citibank's preliminary estimate of month-end FX rebalancing flows points to a net USD selling need on Monday, Aug. 31.

Aug 25 (Reuters) - Citibank's preliminary estimate of month-end FX rebalancing flows points to a net USD selling need on Monday, Aug. 31.

All G10 equity markets are showing gains in August, with the MSCI US index among the top performers at 4%, although behind Japanese equities at 7%.

Citibank say this relative outperformance of US assets has likely left foreign investors under-hedged, giving a new USD sell signal to increase hedges.

Good performance of Japanese assets means that the sell USD/JPY signal is amongst the weakest this month, according to Citibank, while the signal to buy GBP/USD is amongst the strongest.

The bank also highlighted the potential risk of heightened USD selling against EUR this month.

However, despite a lack of any significant data before the month-end fix, Citibank recognised the headline risk to FX from the Jackson Hole symposium being held in the days before.

For more click on FXBUZ

(Richard Pace is a Reuters market analyst. The views expressed are his own)

((Richard.Pace@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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